On 11 January 2022, the Financial Supervisory Commission (FSC) announced the disclosure rules for ESG thematic offshore funds. The key points are as follows:
1.Disclosure Requirements:
(1)Investor Brochure: The master agent must disclose the following ESG information in the investor brochure: (i) investment objectives and evaluation standards; (ii) investment strategies and approaches; (iii) investment allocation and percentage; (iv) reference performance benchmark (if any); (v) exclusion policy (if any); (vi) risk warning; and (vii) stewardship and engagement.
(2)Website: The master agent must announce its annual evaluation on the ESG thematic offshore funds within 2 months after the end of each year, which include: (i) actual investment percentage against ESG investment strategies and screening standards,(ii) comparison of ESG investment against benchmark applied (if any); and (iii) stewardship actions taken.
2.Required Actions:
(1)Where the Chinese name of an offshore fund involves ESG themes (such as ESG, sustainable, green, carbon, new energy or revolution, alternative energy, environment protection, water resource, environment, social responsibility, etc.) and has already been approved by the FSC:
(a)The master agents must amend/supplement the relevant information in the investor brochure and file the same with the FSC for approval within 6 months after the announcement.
(b)Where the required disclosure is not complied with or the investor brochure is not amended accordingly, specific warnings that the fund is not an ESG thematic fund must be added following the fund name and in the investor brochure. Chinese names of funds containing “ESG” or “sustainability” must also be removed.
(2)For an offshore fund already approved by the FSC without ESG theme in its Chinese name but is intended to become ESG thematic funds now, the master agent may file the investor brochure of the fund with the required disclosure with the FSC for an approval.
Mike Lu/Jeffrey Liu/Eliza Lee
